Services / Protect
FX Risk Management & Hedging
You can't predict a currency. You can decide how much of the move you are exposed to. Fix a rate, protect a floor or wait, deliberately rather than by default.
04 / Protect
What is currency hedging?
Currency hedging, also called FX hedging, is a plan to reduce surprises: fixing some or all of a future exchange rate so that a currency move can't change what you pay or receive. The risk isn't today's rate, it's the rate on the day you pay. BLK.FX helps you decide how much to protect, then prices and monitors it for you.
What is a forward contract?
A forward contract lets you lock in an exchange rate today for a future payment, so you know what you will pay or receive later.
Importing goods: lock rates so costs do not jump and margins stay protected. Paying tuition: lock a rate at the start of the year to avoid last-minute surprises.
Structured forwards can add flexibility when payment dates are not exact, up to a defined window.
Full or partial protection
Forwards and spot conversions
Budget rate strategy
Free modelling on FX.Exposure
Know your risk
What kinds of currency risk does a business carry?
Currency risk management starts with knowing which of these you carry. Most businesses only notice one, and usually the other two are already in motion.
Transaction
Transaction exposure
An invoice or order priced in one currency, settled in another, days or months later. The gap between the two dates is where the risk sits.
Translation
Translation exposure
Foreign subsidiaries, assets or balances restated into your reporting currency at each year end. Nothing was traded, but the number still moves.
Economic
Economic exposure
A longer shift in a currency that changes what you can charge, or what a competitor abroad can charge instead. Slower to show up, harder to hedge.
The instruments
How do you hedge currency risk?
Fix today's rate for later, set the rate you want, or agree the worst rate you'll accept. We price whichever fits; there is no self-serve version of this.
01
Forward contracts
Lock in an exchange rate now for a payment you will make later, so the number in your budget is the number you pay.
02
Limit orders
Set a target rate above the market. We watch it around the clock and it executes automatically the moment it is hit.
03
Stop-loss orders
Agree the worst rate you'll accept in advance. If the market falls through it, the trade executes there and the loss stops.
04
Credit facilities
Forward contracts usually need a deposit. Through our partner lenders, it can be financed instead of tying up your cash.
Free
Model your exposure first on FX.Exposure. BLK.FX's free calculator shows what a currency move would do to your numbers, before a call or a hedge. Try FX.Exposure ↗
Common questions
FX Risk Management & Hedging, answered.
Who needs FX hedging?
Any business or structure with a known future payment or receipt in another currency: importers and exporters, finance directors working to a budget rate, PE and VC backed businesses with capital in one currency and costs in another, property SPVs with a fixed completion date, and trusts and funds paying distributions abroad.
What's the difference between a forward contract and a limit order?
A forward contract fixes a rate now for a payment on a set date, whatever the market does in between. A limit order only executes if the market reaches your target, so you keep the upside if it moves your way, but nothing is fixed until it is hit.
Do I have to hedge all of an exposure?
No. Most businesses fix a portion of a known, dated exposure and leave the rest open. We can talk through a split that matches how much movement the business can actually absorb.
Is there a cost to setting up a hedge?
The margin is agreed before anything is confirmed, in the same conversation as the rate itself. A forward contract can also need a deposit, which can be financed through our partner lenders instead of coming out of your own cash.
Can I see my exposure before I commit to anything?
Yes. Model it yourself first on FX.Exposure, BLK.FX's free calculator, or book a call. Either way you leave with a plain view of the exposure, whether or not you go on to hedge it.
FX Risk Management & Hedging
Find out what you're exposed to,
before it costs you.
Add what you buy, sell or hold in another currency, and roughly when. FX.Exposure shows you the exposure and the options for fixing it, free.